This is the one to avoid! Can result in a nasty FBT bill and a reportable fringe benefit for the employee!
Often arises (unknowingly) due to employee’s sourcing their own car space agreement and then entering into arrangement whereby the employer reimburses the employee monthly for the monthly car parking lease fee.
Let me illustrate:
An employee leases a car space for the 2012 FBT year in their own name for $880 per month including GST. The employer reimburses the employee on a monthly basis.
The lowest CPS within a 1 kilometre charges an average daily rate of $12 including GST.
The FBT payable under the Statutory Formula Method (SFM) is $2,627. Car parking fringe benefits are not reportable on an employee’s 30 June 2012 payment summary.
However, and it’s a big however, as the employer provides the car parking by way of an expense payment reimbursement, then the benefit must be valued based on the amount reimbursed. So the above SFM calculation is not applicable and only useful in illustrating the resulting problem ….
The annual FBT payable on the monthly reimbursement of $880 is $10,139. Or a nasty $7,512 MORE TO PAY than under the SFM.
In addition, the employee will end up with an amount of $19,739 as a reportable fringe benefit on their 30 June 2012 payment summary, as opposed to a nil amount ordinarily.
Another situation that commonly arises where FBT is payable in full on car parking, is where an employer regularly reimburses an employee’s daily car parking fee. This may be an ongoing “policy” agreement between the employer and their employee/s due to a lack of car spaces in the employers premises or is often seen as being an equivalent cost to a taxi fare for employees who regularly are required to work late (in this case the taxi fares would be exempt from FBT).
However, where an employer regularly reimburses an employee’s daily car parking fee, then FBT will be payable in full on the total amount reimbursed. If the reimbursement is not so regular, then it may be possible to claim the minor benefit exemption. Although what’s regular and what’s irregular? We’ll park that story for another time!